Contract Procurement : Audits


Caltrans' Audits and Investigations Division ("Audits") evaluates consultant's accounting systems and business practices for every contract that is awarded. Caltrans may, at Audits' discretion, conduct an audit or workpaper review of the consultant's financial information. This is currently being completed post-award however this can also be completed pre-award depending on resources.

A&E Process Flowchart
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Audits seeks to answer specific questions about the consultants' accounting systems, including:

  • Does their system allow them to segregate costs between Caltrans and other clients they may be working with?
  • Does their timesheet system record direct and indirect projects?
  • Do they have a method of keeping financial data consistent with generally accepted accounting principles (GAAP)?

Consultants that do not successfully pass this audit may not be fit to work with Caltrans.

A post-award workpaper review or audit is carried out after the contract has been executed. In the past, normal practice was to ensure the consultant's financial information was acceptable before awarding the contract. Post-award audits were conducted only when justified and formally requested. To accelerate contract execution, almost all contracts now are evaluated using a post-award workpaper review or audit.

Effective July 1, 2010, Caltrans implemented a Certified Public Accountant (CPA) Workpaper Review Program, that requires prime consultant awarded A&E contracts equal to or more than $3,500,000 to submit the following:

  • CPA-audited Indirect Cost Rate Audit Report or approved State DOT Cognizant Indirect Rate
  • Completed Internal Control Questionnaire (ICQ), Appendix B of AASHTO Guide

The Caltrans Letter Regarding Revised Audit Guide is at: http://caltrans-opac.ca.gov/aeinfo.htm